bitcoin with PayPal

Buying bitcoin with PayPal sounds like a quick easy way to get some bitcoin. It really is not, and is likely to cost you more, or lose you money! In this article, we explore the options you have for buying bitcoin using PayPal, furthermore, we look at the risks associated with doing so.

We love Elon Musk, co-founder of PayPal and presently in charge of Tesla Motors and SpaceX. Paypal however, does not like to play nice with cryptocurrency. This is because PayPal digitizes money, in contrast, cryptocurrency like bitcoin is real Digital Money.

To buy bitcoin using your PayPal balance you will first need to fund your PayPal account. This is usually via debit card or bank wire (Why not simply send the funds directly to an exchange?). The other way would be for you to have a bank account associated with your PayPal account (What is the point of this when it simply adds more fees to your transaction and adds no value?).

Where can you buy bitcoin with PayPal?

There are some options available to you, but all of them have a messy process or many risks associated. As a South African, buying bitcoin using Paypal simply makes no sense. It is much easier and quicker buying or selling bitcoin by registering with any of the reputable cryptocurrency exchanges in South Africa and then fund your account instantly via EFT. Nonetheless, we take a look at the 3 most promoted methods to buy bitcoin with PayPal. (This does not include physical transactions at a meetup).

  1. Buy from an online Shop
    Simply signup, login, buy BTC and pay using the PayPal button
  2. Direct Trade
    Sign up with a bitcoin exchange which accepts PayPal, fund your account and trade …. not so simple. This only usually works for P2P exchanges and has a soccer stadium full of risk associated with it.
  3. Bitcoin Loans
    I bit of a longwinded approach but it does technically work, so we decided to include it.

On a more practical level, here are the basic steps you would take to buy bitcoin with PayPal using these methods.

With XCoins you pay a lenders fee, which at its lowest is 15%. You also pay a “loan origination fee,” at 7.5% of your transfer amount & processing fee. In addition, there is also a flat rate of a few cents on top of that. PayPal transactions on Xcoins are not cheap.


The joke here is that VirWoX is not a Bitcoin exchange. It is a marketplace for the popular online virtual world, Second Life. More specifically it is a marketplace for SLL (Second Life Linden Dollars). Whilst you cannot buy bitcoins with PayPal directly using VirWoX, it is possible to buy SLL and in turn, then sell these for bitcoins. As mentioned, this takes a bit of messing around. The process does, however, work reliably. The biggest issue is that all the associated fees total roughly 10% – 15%.

Here are the quick steps to buy bitcoin with PayPal on VirWox:

  • Deposit dollars or euros using PayPal to VirWoX exchange. (this will probably eat away the first chunk of your cash, as you will be paying PayPal to convert your Rand to Dollar or Euro first)
  • Purchase “Second Life Lindens” with your USD or EUR
  • Now buy bitcoins with your “Second Life Lindens”
  • Withdraw the BTC to your own bitcoin wallet!

Another limitation on VirWox is that they will restrict you to €1000 per 24hours or €10000.00 per month, so you are unlikely to get more than a single bitcoin using this method. New accounts also take some time to build credibility so your first transaction may take around 3-4days.


The only direct trade method to get bitcoin using Paypal is a peer-to-peer (P2P) exchange. This is when you are basically buying a fixed amount of bitcoin for a fixed price in a regular FIAT currency such as Dollar, Euro or Rand through a single trade. Paxful is a website that helps connect you with a seller, where you can buy bitcoin and pay via PayPal.

Here are the quick steps to buy bitcoin with PayPal on Paxful:

  • Sign up for an account on the Paxful homepage.
  • Search for offers from sellers that accept PayPal as a payment method. You will have to be patient. You think about it like walking around at an auction where you wait for the auctioneer to call your #lot.
  • Select an offer you like. (Base this on the bitcoin price index in USD, and the usual homework you would do on someone you plan on doing business with). Click BUY to confirm your order and get your PayPal account ready.
  • Double check the terms set by the seller you have chosen. They may require proof of ID, proof of address or similar means of identification.
  • If you like their rules, confirm the amount of Bitcoin you want to buy with PayPal and click the big BUY button.
  • Paxful will now put you in direct contact with the seller. You will need to discuss and confirm the details of the transaction, but once you have sent your payment using PayPal, you need to wait for the seller to confirm the release of the coins from Paxful.
  • Once confirmed you will receive the bitcoin you bought with PayPal in the bitcoin address you have provided.


This is a novel way to BUY bitcoin with your PayPal balance. Not really worth it if you a not glued to your computer every day. The premise here is that you pay someone using PayPal, in order to “lend” their bitcoin, which you can then do with, as you see fit. Sounds Crazy? Well, people are doing it … though for the convenience of using this service, you pay a lenders fee, which at its lowest is 15%. You also pay a “loan origination fee,” at 7.5% of your transfer amount & processing fee. In addition, there is also a flat rate of a few cents on top of that. PayPal transactions on Xcoins are not cheap. If you buy bitcoin with PayPal, you are not creating wealth

Here are the quick steps to buy bitcoin with PayPal on Xcoins:

  • Head to the XCoins homepage, sign up for an account and verify it with the link emailed to you.
  • Input the amount of bitcoin you want to buy in bitcoin or your chosen currency. Xcoins will then search for a suitable lender for your transaction. (We could not find any for ZAR Rand at time of publication).
  • WAIT…..
  • The system will look for and find a lender, including processing and lender fees. If you are happy to go ahead with the purchase based on those figures, read the linked loan agreement and continue to payment.
  • You then need to log into your PayPal account and validate the transaction as usual.
  • Back on the Xcoins page, your bitcoin will now be in your Xcoins wallet, at which point you can send it to a more secure bitcoin wallet of your choice (again you incur fees here).

Amount limits when buying bitcoin with PayPal

Paypal has its own set of criteria for transactions and this directly impacts on your ability to buy or sell bitcoin using PayPal. Some individuals have limits of around R3000 to R4000 imposed on their Paypal accounts

Why do crypto exchanges not accept PayPal?

Most full order book exchanges will not accept PayPal as a standard funding method. The reason is that on a full order book exchange, they match your trades with other trades, not necessarily individual people. The exchange, however, does not take part in the trading. This leaves a risk for the exchange. Unless the exchange is confident that they can account for both the FIAT funds and Crypto funds, they can not match a trade. With Paypal deposits, this is not possible. The Exchange becomes the merchant and is then open to chargebacks. Moreover, the exchange will need to have a business account with PayPal, which in turn, brings its own set of requirements. The risk is too high, and the reward too low for exchanges to accept this deposit method.

The last word

In conclusion, there are many options available to you, choosing the right option, depends on your personal circumstances and needs. The most effective way to acquire more bitcoin is to BUY it on a reputable exchange. Fund your exchange account via a direct bank transfer and place a Limit BUY order.

What has your experience been with buying bitcoin for the first time? We would love to hear your views, so please leave a comment below.

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Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.